​UK tops world table for economic growth

The UK economy is expanding at its fastest rate since 2007, performing better than any other economy in the G7. Despite the GDP boost, critics say that youth unemployment and wage depression point towards far deeper structural issues.

According to figures
produced by the Office of National Statistics (ONS) on Friday,
GDP grew by 0.8 percent, making the quarter running until the end
of June the fastest period of growth since before the financial
crash.

Annual growth was revised up to 3.2 percent, 0.1 percent higher
than initially predicted by economists.

Britain’s growth
contrasts significantly with the rest of Europe, whose economies
ground to a halt, according to official data produced on
Thursday. The data analyzing economies within the Eurozone showed
a surprise fall in Germany’s GDP, while the French and Italian
economies didn’t grow at all.

Commenting on the figures, the Treasury said successive periods
of consistent growth confirmed “[the] economy has recovered
all of the output it lost in the ‘Great Recession’ and is now
bigger than its previous peak in the first quarter of 2008.”

A spokesperson also said strong growth in the economy proved the
government’s economic plans ‘were working’ but that the ‘job is
not done yet’, signalling that new economic policies – including
the possibility of further austerity measures – may be rolled out
before next years’ general election.

The figures show that UK growth was boosted by the services
sector, which grew by 1 percent in the second quarter – with the
sector expanding by 0.3 per cent in June alone. In contrast,
industrial production was revised down to 0.3 per cent, while the
construction sector grew by 0.5 percent.

Structural issues persist

Despite the UK’s strong economic performance, the government has
been criticized for its failure to tackle structural issues in
the economy, including poor records on wage growth and youth
unemployment.

On Wednesday, the center-left think tank Public Policy Research
(IPPR) said that there were still more than half a million
young people unable to find work, while overall unemployment
remains above 2 million people.

Additionally, ONS data also showed that Britons are earning less
in terms of real wages than they did last year, with average
weekly earnings declining by 0.2 percent – the first time wages
have declined since 2009.

According to economists at the National Institute for Economic
and Social Research (NIESR), wage depression is the result of
declining economic productivity in the UK, which is currently
below pre-crisis levels.

“The productivity performance, therefore, remains abysmal.
With output per hour worked still around 4.5 percent below the
pre-crisis peak, we expect pre-crisis productivity levels to be
regained only in the latter half of 2017 – although, given the
continuing puzzle about the causes of poor productivity
performance, large uncertainties remain" a NIESR
spokesperson said.

While government ministers remain optimistic about the UK’s
economy, Foreign Secretary Phillip Hammond has warned that its good fortunes could be short
lived in the wake of the ongoing political crisis between Europe
and Russia.

Speaking to Sky News, Hammond warned that sanctions on Russia,
which were imposed following the downing of flight MH17 in
Eastern Ukraine, could have a huge impact on the UK economy,
particularly in the agricultural and energy sectors.